Politicians split on debt-ridden US flood scheme

A battle is brewing among US politicians over renewal of the National Flood Insurance Program (NFIP), which is due to expire on September 30.

Lawmakers have tabled two competing bills proposing contrasting ways to extend the federal program,according to AM Best's News Service and US media reports.

One of the bills, the Safe National Flood Insurance Reauthorisation Act, seeks to renew the program for six years and cap premium rises at 10% for homeowners.

It estimates this would generate savings of about $US750 million ($985 million) a year.

The bill also gives the Federal Emergency Management Authority, which manages the program, authority to fire consultants, engineers or contractors hired by private insurers that “act in bad faith” or deliberately hurt the NFIP.

Proposals in the competing bill include extending the program for 10 years and allowing more private sector competition, with measures to stop private insurers cherry-picking risks.

More than 5 million homes and businesses are covered by the NFIP. In January it borrowed $1.6 billion ($2.09 billion) from the US Treasury, bringing its total debt to around $US25 billion ($32.77 billion).